Study shows 7% increase in GCC employee compensation

DUBAI:

A study released by online recruitment agency GulfTalent reports a 7 per cent rise in employee compensation in the GCC countries in the year to August, owing to buoyant economic conditions and resultant inflation.

The surge in remuneration is said to be most visible in banking and finance, construction and real estate.

Based on a survey of 3,000 professionals across the GCC, the report, entitled Gulf Compensation Trends 2005, was presented during the Middle East HR Summit this week in Dubai.

It suggested not only that pressure on salaries had arisen in the private sector, responding to public sector pay adjustments, but that the rapid pace would continue, owing to escalating living costs, a limited pool of available talent, and citizens expecting to share more in their countries' oil revenue windfall.

Consequently, HR managers across the region are in a frenzied rush to review their own companies' pay scales, although hampered somewhat hitherto by incomplete comparative data.

While the data are relatively evenly spread, Qatar leads the way with an increase of 7.9 per cent, followed by Saudi Arabia 7.4 per cent, Kuwait 6.9 per cent, UAE 6.5 per cent, Bahrain 6.3 per cent and Oman with 5.9 per cent.

Backed by oil revenues, salaries jumped in the public sector earlier this year, initiated by a 15-25 per cent shift by the UAE government.

Similar moves were seen in Kuwait, Bahrain, and Saudi Arabia (the latter representing the first across-the-board adjustment for over 20 years).

In the UAE, Qatar and Kuwait, the overall spurt is characteristic of generalised inflation (though particularly acute in rents and basic amenities), whereas in Saudi Arabia, Bahrain and Oman it relates rather to shortages specifically in qualified personnel.

Another contributory factor, reported with some surprise by HR managers at multinationals and banks in the Gulf, has been robust growth in India and other countries such as Jordan, keeping candidates at home unless lured abroad by competitive packages.

The report predicts salaries will continue on an upward trend, leading to a cycle of inflation, and eventually to excessive operating costs for some businesses, which will tend to relocate or outsource.

Companies in the region might also be prompted to invest more in recruitment and training of Gulf national women, especially in Saudi Arabia, where their participation is lowest.